In this House of Lords decision it was held that a private care home providing care and accommodation for an elderly person under contract with a local authority was not exercising "functions of a public nature" within s 6 of the Human Rights Act 1998…
However, the modern form of the 1948 National Assistance Act made a clear distinction between a local authority with a statutory duty to arrange care and accommodation for those unable to arrange it themselves, and a private company providing services with which the local authority contracted on a commercial basis in order to fulfil its duty to arrange such care and accommodation.The issue in this appeal is whether a care home (such as that run by Southern Cross Healthcare Ltd), when providing accommodation and care to a resident (such as Mrs YL, the appellant), pursuant to arrangements made with a local authority (such as Birmingham City Council) under sections 21 and 26 of the National Assistance Act 1948, is performing "functions of a public nature" for the purposes of section 6(3)(b) of the Human Rights Act 1998 and is thus in that respect a "public authority" obliged to act compatibly with Convention rights under section 6(1) of that Act. Sections 21 and 26 of the National Assistance Act 1948 confer statutory powers and impose a statutory duty. The duty is imposed on the relevant local authority. It may be discharged by arranging for the provision of residential care in a home run by itself, or by another local authority, or by a voluntary organisation or by a private provider such as Southern Cross. ...
This is correct, but not in my view significant. The intention of Parliament is that residential care should be provided, but the means of doing so is treated as, in itself, unimportant. By one means or another the function of providing residential care is one which must be performed. For this reasons also the detailed contractual arrangements between Birmingham, Southern Cross and Mrs YL and her daughter are a matter of little or no moment.
The provision of residential care is the subject of very detailed control by statute, regulation and official guidance, and criminal sanctions apply to many breaches of the prescribed standards. The issue which your Lordships must decide, as expressed in paragraph 18 of the order of Ryder J of 12 September 2006, is whether the second Respondent, Southern Cross Healthcare Ltd ("Southern Cross"), "in providing care and accommodation for YL [the appellant] is exercising a public function for the purposes of section 6(3)(b) of the Human Rights Act 1998". Bennett J held, on 5 October 2006, that it was not. The Court of Appeal, on 30 January 2007, agreed:  2 WLR 1097. But these decisions are challenged before the House by YL, supported by the Secretary of State for Constitutional Affairs and by Justice, Liberty, the British Institute of Human Rights, Help the Aged and Age Concern England, each an independent body. It is convenient to refer, briefly, to the statutory and factual background to the formulation of this preliminary issue.
These examples illustrate, I think, that it cannot be enough simply to compare the nature of the activities being carried out at privately owned care homes with those carried out at local authority owned care homes. It is necessary to look also at the reason why the person ...
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